AI Helps Steer Nvidia Toward $1 Trillion Market Capitalization

Nvidia announced $7.19 billion in revenue for the first quarter ended April 30. That’s down 13 percent compared to the February through April frame in 2022, but up 19 percent from Q4, which ended January 29. Nvidia has forecast a stunning $11 billion in sales for Q2. That projected 64 percent increase puts Nvidia on track to be the first chip company with a $1 trillion valuation. CEO Jensen Huang attributes the sales spike to exploding demand for GPUs to run artificial intelligence systems. “We are significantly increasing our supply to meet surging demand for them,” Huang said of the processors.

“This demand has extended our data center visibility out a few quarters and we have procured substantially higher supply for the second-half of the year,” Nvidia CFO Colette Kress said on the earnings call. “We’re seeing incredible orders to retool the world’s data centers,” added Huang.

“Nvidia’s shares, which have more than doubled in value this year, surged more than 28 percent in after-market trading to reach an all-time high,” The Wall Street Journal reports.

Nvidia’s market cap hit $755 billion, “the fifth-highest public valuation in the United States,” according to The New York Times, which noted that “on Thursday, the company was closing in on the trillion-dollar club.”

Nvidia’s GPUs are used to power AI systems, and also enjoyed a boost during the cryptocurrency boom, which saw a rise in processing-intensive applications. The company’s “shares have more than doubled in 2023 even as concerns of a budding microchip war between Washington and Beijing hangs over the sector,” NYT reports.

The “AI rally” precipitated by Nvidia buoyed other chip stocks, with AMD, ASML and TSMC all gaining. Intel, however, was down. “A possible reorientation toward conventional GPU powerhouses such as Nvidia could come at the expense of CPU-oriented firms such as Intel,” explains CNBC.

“The computer industry is going through two simultaneous transitions — accelerated computing and generative AI,” said Huang in a press release, adding that “a trillion dollars of installed global data center infrastructure will transition from general purpose to accelerated computing as companies race to apply generative AI into every product, service and business process.”

Nvidia is meeting the moment with data center chips that include the H100, Grace CPU, Grace Hopper Superchip, NVLink, Quantum 400 InfiniBand and BlueField-3 DPU. First-quarter data center revenue was a record $4.28 billion, up 14 percent from a year ago and up 18 percent from the previous quarter.

Nvidia Hints at Upcoming AI-Focused Spectrum-4 Ethernet, The Next Platform, 5/25/23
AI Chip Boom Sends Nvidia’s Stock Surging After Whopper of a Quarter, CNN, 5/25/23
Nvidia Nears $1 Trillion Market Capitalization — Closing in on These Other Companies, Forbes, 5/25/23
Nvidia Stock Surge Could Signal the Start of AI Bubble, Yahoo! Finance, 5/25/23
AI Cryptocurrencies Jump After Nvidia Reports Booming AI Demand, CNBC, 5/25/23

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